„Global Systemic Cycles and the Current Transition
An interdisciplinary reflection about global growth, economic cycles, and great power competition”
▶️materialcivilization.com
It took me two years to write this article. I am going to make several threads about it.
🧵🧶🪡
1/23
An interdisciplinary reflection about global growth, economic cycles, and great power competition”
▶️materialcivilization.com
It took me two years to write this article. I am going to make several threads about it.
🧵🧶🪡
1/23
First of all, let’s pay tribute to Fernand Braudel, the greatest economic historian of all times.
“If deep movements are in your favour, you will be served, pushed forward – beyond your merits, beyond even your reflections, notwithstanding your intellectual abilities.”
2/23
“If deep movements are in your favour, you will be served, pushed forward – beyond your merits, beyond even your reflections, notwithstanding your intellectual abilities.”
2/23
Key theses of the article:
1. There is a cycle of the “Global System”, which consists of the necessary renewal of its 4 pillars:
—institutions
—the international trade system
—the regime of accumulation
—connective infrastructure
3/23
1. There is a cycle of the “Global System”, which consists of the necessary renewal of its 4 pillars:
—institutions
—the international trade system
—the regime of accumulation
—connective infrastructure
3/23
2. Global growth is a function of the hierarchy of the Global System. The weakening of the international hierarchy leads to disorder and unproductivity.
4/23
4/23
3. The US possesses all the necessary fundamentals to stay on top of the international hierarchy, even though it needs to change its mode of governance.
5/23
5/23
Does the economy have more influence on the course of history than politics?
No. The fallacy of the “end of history” is the product of this flawed assumption.
6/23
No. The fallacy of the “end of history” is the product of this flawed assumption.
6/23
Wealth is the fuel of power and power is the fuel of wealth.
Nevertheless, the second proposition seems to be less well-known than the former and the purpose of this piece is to provide some insight into this matter.
7/23
Nevertheless, the second proposition seems to be less well-known than the former and the purpose of this piece is to provide some insight into this matter.
7/23
Thinking that we are in a transition phase and looking for huge upheavals ahead is fashionable at the moment, and rightfully so.
Economists sometimes speak about “secular cycles” without entering into many details, and not much actual work has been done on this topic.
8/23
Economists sometimes speak about “secular cycles” without entering into many details, and not much actual work has been done on this topic.
8/23
For this purpose, I have explored the world-system theory, which is multidisciplinary approach to world history and social change.
It seems to have been forgotten since the 2000s. I don’t understand why, because I find it fascinating.
9/23
It seems to have been forgotten since the 2000s. I don’t understand why, because I find it fascinating.
9/23
The world-system theory was developed on the basis of Fernand Braudel’s work.
Although it was also partly derived from the Marx-inspired dependency theory, it is necessary to distinguish between Marxian analysis and Marxist politics.
10/23
Although it was also partly derived from the Marx-inspired dependency theory, it is necessary to distinguish between Marxian analysis and Marxist politics.
10/23
If Marx had not written Capital, no one would know what capitalism is. Capital is one of the founding works of modern political economy, and this does not make every economist a zealot of the Communist Manifesto. The same is true for the World-System theory.
11/23
11/23
But, first of all, what is capitalism?
It is a concept that is at the same time very widely used and deeply misunderstood. For most people, capitalism is confused with the free market.
These are in fact two very different things.
12/23
It is a concept that is at the same time very widely used and deeply misunderstood. For most people, capitalism is confused with the free market.
These are in fact two very different things.
12/23
According to Max Weber, capitalism is a mode of production in which:
—most of the production is done for profit using privately-owned means of production
—labour is hired
—coordination is decentralized.
However, this is only the definition of industrial capitalism.
13/23
—most of the production is done for profit using privately-owned means of production
—labour is hired
—coordination is decentralized.
However, this is only the definition of industrial capitalism.
13/23
From the perspective of history, the concept of capitalism was extended by Fernand Braudel to other ways of managing money on a large scale, which appeared in Italy in the late Middle Ages: merchant capitalism and financial capitalism.
14/23
14/23
In Braudel’s definition, the purest form of capitalism is the management of capital on a large scale, both geographically and quantitatively. This implies a high degree of capital centralization and often monopolies.
15/23
15/23
It should be noted that the Dutch East India Company, the first large multinational enterprise, was a monopoly. The American economy was also built by monopolies and the large American multinational companies of today dominate their markets to a very large extent.
16/23
16/23
This concentration of capital is the corollary of a greater capacity for diversification. Financial capitalism (i.e. high finance) is the most central and most powerful type of capitalism because it controls the other types and can seize them at any moment.
17/23
17/23
In finance, the ability to diversify is the key to success: it reduces risk while multiplying the possible sources of profit.
Besides, large companies are a necessary tool to dominate international trade. Global players need to have a global size.
18/23
Besides, large companies are a necessary tool to dominate international trade. Global players need to have a global size.
18/23
This last definition of capitalism is at the heart of the World-System analysis, which consists of three powerful ideas:
— the world-system structure
— short systemic cycles of accumulation
— long systemic cycles of accumulation
19/23
— the world-system structure
— short systemic cycles of accumulation
— long systemic cycles of accumulation
19/23
1. The World-System structure:
international division of labour with a politico-economic chain of command linking the core of the world economy – where high value-added activities are concentrated – to a semi-periphery and a periphery.
20/23
international division of labour with a politico-economic chain of command linking the core of the world economy – where high value-added activities are concentrated – to a semi-periphery and a periphery.
20/23
2. Short systemic cycles of accumulation:
successive ~110 years cycles that occurred during the last 4 centuries, each being driven by a capitalist hegemon replacing the former one or re-succeeding itself due to both its conquests and its update of the capitalist system.
21/23
successive ~110 years cycles that occurred during the last 4 centuries, each being driven by a capitalist hegemon replacing the former one or re-succeeding itself due to both its conquests and its update of the capitalist system.
21/23
3. Long systemic cycles of accumulation:
~300-500 years cycles based primarily on the development of a system of regional hegemons/empires that sustained an international system of trade, until a disruption of the international chain of command ended the cycle
22/23
~300-500 years cycles based primarily on the development of a system of regional hegemons/empires that sustained an international system of trade, until a disruption of the international chain of command ended the cycle
22/23
This was only half of the introduction.
I hope I have sparked your interest in the subject. My next thread will be about these historic cycles and the logic of cycles in ecosystems in general.
Here is the link to the article again:
▶️ materialcivilization.com
23/23
I hope I have sparked your interest in the subject. My next thread will be about these historic cycles and the logic of cycles in ecosystems in general.
Here is the link to the article again:
▶️ materialcivilization.com
23/23
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